Stock Prices Aren’t Enough For ‘Rule Of Reason’ Analysis

The complexities of the rule of reason analysis articulated in the U.S. Supreme Court’s 2013 decision in FTC v. Actavis have left many practitioners searching for evidence to demonstrate the presence or absence of anti-competitive effects¹. A recent publication on the use of stock market evidence to evaluate “reverse payment” settlements states that “a jump in the patent holder’s stock market price in response to a reverse payment settlement should suffice to show anti-competitive effects².” In this article, we explain why stock market evidence should not shortcut the rule of reason analysis required for these settlements in a post-Actavis world, and is far from the “smoking gun” proclaimed by some advocates.